If the margin is not added in time, if the loss is small, the futures company may not close the position for the time being. If you lose more, the futures company will close your position with insufficient margin at the right time.
There are two kinds of deposits:
One is the settlement reserve, which is what we usually call available funds. It is the funds that investors prepare for trading settlement in futures accounts in advance, and it is the deposit that is not occupied by contracts. For example, this part of the funds is used by traders when they open new positions.
The other is trading margin, also called margin occupation, which is the fund to ensure the performance of the contract and the margin that has been occupied by the contract, that is, this part of the fund has been frozen and cannot be used, that is, it cannot be used to build a new warehouse.
Initial margin is the money that traders need to pay when they open new positions. According to the transaction amount and the margin ratio, that is, initial margin = transaction amount * adjusted margin ratio. At present, the minimum margin ratio in China is 5% of the transaction amount, which is generally between 3% and 8% internationally.
For example, the soybean margin ratio of Dalian Commodity Exchange is 5%. When a customer buys five soybean futures contracts (each 10 ton) at a price of 2,700 yuan/ton, he needs to pay an initial deposit of 6 750 yuan to the exchange (that is, 2,700× 5×10× 5%).
In the process of holding positions, traders will have floating profits and losses (the difference between settlement price and transaction price) due to the constant changes of market conditions, so the funds actually available in the margin account can be increased or decreased at any time.
Floating profit will increase the balance of margin account, while floating loss will decrease the balance of margin account. The minimum balance that must be kept in the margin account is called maintenance margin. Maintenance margin: the settlement price is adjusted to the position, and the margin ratio is adjusted to xk(k is a constant, which is called the maintenance margin ratio, which is usually 0.75 in China).
The proportional margin system is the trend of market development, because it can keep the risks of futures companies and exchanges at a certain level all the time, while the fixed margin system can not meet such requirements.
If the fixed margin system wants to ensure that the risks of exchanges and futures companies are always within the controllable and acceptable range, only by setting the original margin high enough to make the index fluctuate at the highest level that can be expected can the customer margin still be guaranteed to be no less than a certain order of magnitude (for example, 6%). When the index is at a low level, the utilization rate of market funds is low, which leads to the decrease of market efficiency.
The solution to this problem is that the exchange adjusts the size of the fixed margin according to the level of the index, but this involves new efficiency problems, because the index may rise to a higher level soon after lowering the margin level, forcing the exchange to adjust again in the short term.